Brexit Institute News

Brexit, Spain and British Gibraltar

June 27, 2019

Brexit, Spain and British Gibraltar

Gerry O’Reilly (Dublin City University)

Brexit has been closely followed by UK and EU citizens alike in the British Overseas Territory of Gibraltar (area: 6.8 sq. km.) and its Spanish hinterlands – Campo de Gibraltar in Andalucía. For people there, as in Dundalk, Newry, Derry/Londonderry and Ireland, an immediate concern remains Brexit and future border arrangements (Reyes, 2019). Of course, the EU and authorities in Cyprus are also monitoring Brexit related events in Ireland and Gibraltar, due to the British Overseas Territory and Sovereign Base Areas of Akrotiri and Dhekelia on the divided island of Cyprus.

Gibraltar (pop. 34,000) gets 11-12 million visitors annually, mostly arriving by land at the La Linea crossing, on the 1.2 km border, and 12,000 workers cross the Gibraltar border daily. About 50% of these workers are Spanish and the rest are either British or other EU citizens (Caleb, 2013). In comparison, over 110 million border crossings occur annually between Northern Ireland and the Republic for all categories: work, business, trade, education, health and family (Smith, 2017). The highest vote in the UK to remain in the EU – 96%, in the 2016 Brexit referendum was registered in Gibraltar. However, an even greater number of the electorate there want to retain sovereign links with the UK. In 2002, 99% of Gibraltar’s voters rejected the idea of joint sovereignty between Britain and Spain (see also, RTÉ News report on the row that erupted over the post-Brexit future of Gibraltar).

But what does Brexit mean for Gibraltar, that was ceded by the King of Spain to the Crown of England in 1713 in the context of dynastic disputes, but never fully accepted by Spain that has called for retrocession ever since then. Essentially, in modern history, right-wing parties in Spain have pursued more belligerent policies for recovering Gibraltar, than the more conciliatory strategies of left-wing parties. Nonetheless, no party in Spain would or could stand on a platform that renounces Spain’s claim to Gibraltar, as this would not be accepted by the electorate. This political spectrum in Spain regarding Gibraltar is largely mirrored in UK politics also. However, since the opening of the Anglo-Spanish Gibraltar border with Spanish adhesion to the EU in 1986, and major input of the Spanish Socialist Workers’ Party (PSOE) and British Labour administrations when in power, the EU provided a modus operandi, for a successful modus vivendi to develop with greater integration of economies and communities.

Brexit and historical realities

In 1704, an Anglo-Dutch force took Gibraltar within the context of the Spanish Wars of Succession (1701-14), with different European powers backing dynastic claimants to the Spanish throne. At the conclusion of the war, the Dutch left but British forces remained, gaining sovereignty, with the ‘Rock, castle and fortifications thereunto belonging’ ceded by the Spain Crown to the English Crown, based on Article X of the Treaty of Utrecht (1713). However, no maps of the area ceded were included in the Treaty; this has led to ‘interpretations’ and disputes ever since. Over the centuries there was movement by the British to the north of the Rock area along the isthmus neck of land up to the now ‘international border’ Fence at La Linea.

Between 1830 and 1981, Gibraltar was designated the Crown Colony of Gibraltar and listed as such by the UN Decolonization Committee in 1946. Under the 1981 British Nationality Act, it became a British Overseas Territory, dropping the word Colony. While a civilian town council and trade unions were created in the decades following WWII; essentially the Crown Colony was under the direct control of the Governor appointed by London.

The British government sponsored a referendum in Gibraltar in 1967, arguing that this was consistent with UN Resolution 2231, which called on both Spain and UK to take into account the interests of the people of Gibraltar. In it 12,138 of the 12,237 voters chose: “voluntarily to retain their links with the UK”. The referendum was condemned by the UN General Assembly, and not recognized by any international body or state. Nonetheless, the UK continued to promulgate the Gibraltar Constitution Order (1969), in which it was stated that: “Her Majesty’s government will never enter into negotiations under which the people of Gibraltar would pass under the sovereignty of another state against their democratically expressed wishes.” In 1969, a House of Assembly was created which eventually became the Gibraltar Parliament in 2006, when the term ‘Colony’ was removed from the Constitution. In 2002, the Gibraltarian British Overseas Territories citizens were granted the right to full British citizenship.

Due to the very positive working relationship between Spain and the UK within the EU, since Spain joined in 1986, there was collaboration on many issues, but matters concerning Gibraltar’s remained contentious, due to the absolute refusal of the Gibraltarians to consider any proposals of joint-sovereignty, autonomous regional status in Spain or similar. In a referendum in 2002, a proposal for shared sovereignty was overwhelmingly rejected by the Gibraltar electorate with 99% voting against.

Essentially up to the 1990s, official Spain viewed the population of Gibraltar as ‘artificially created by British colonial’ processes due to their ethnic heterogeneous origins, and not fulfilling criteria for self-determination that could be interpreted as giving a right to UN ‘national’ self-determination principles. Nonetheless, since 2002 Spain has been willing to offer the Gibraltarians the constitutional status of an autonomous region or community within the Spanish state. While Britain has always argued that the territory was ceded to Britain in the 1713 Treaty, in more recent decades, the UK has been arguing that UN principle of territorial integrity (UN Res. 1514 (XV) does not override the principle of self-determination in Gibraltar (UN Res. 1541) with the democratically expressed wish of the people there to remain under British rule.

Gibraltar’s sovereignty remains a sensitive issue for two large European states and former colonial powers readjusting to contemporary geopolitical realities. Due to Gibraltar’s very limited geographical area and small population, lying only 14 km. from North Africa, the international community is averse to the establishment of an independent micro-state in such a geostrategic location on the Strait. The Gibraltar gateway links Atlantic-Mediterranean and Suez Canal maritime transit routes. Historically, British Gibraltar was a key station on the British-India route connecting Malta – vital location between eastern and western Mediterranean basins; Cyprus – facing the Turkish Straits (only 700 nautical miles away) giving entrance to the Black Sea and surrounding countries; and Egypt’s Suez Canal (opened 1869) offering access to the Red Sea, Indian Ocean and Persian-Arabian Gulf oil-rich countries including the UAE, Yemen, Kuwait, Bahrain, Iraq and Saudi Arabia, whose boundaries were delineated by the British authorities in the 20th century. Besides oil and gas transit to northern Europe and America, the Strait remains a key route in security planning and supplies between the USA and allied countries in the MENA (Middle East and North African) including Israel.

Citizens in Gibraltar and Campo

Citizens in Gibraltar and Campo alike, as well as the Gibraltar government and business communities, are closely following the Brexit imbroglio between the UK and Brussels authorities, and particularly, the contentious Backstop clause – safety net or ‘Barrera’ regarding the UK-EU/Irish border. While Northern Ireland is an integral part of the UK constitutionally, Gibraltar is not and remains a British Overseas Territory located within the EU, 1,800 km. from London, for which the British Government has constitutional responsibility with the EU (O’Reilly, 1999: 11-19).

When the UK joined the EEC/EU in 1973, Gibraltar (officially designated Crown Colony at that date) was included in the UK Accession Treaty as a territory for whose external relations the UK is responsible. However, Gibraltar is exempt from the Common Market provisions, Common Agricultural Policy (CAP), harmonization of turnover taxes, and VAT. Along with this, non-resident businesses do not pay income tax unless the source of this income is Gibraltar proper, and there is no tax on capital income; no capital gains tax, wealth tax, or sales tax making Gibraltar a thriving business centre in contrast to neighbouring Andalucía in Spain.

The famous Rock – or Overseas Territory is a peninsula of the Spanish landmass, located at the eastern entrance to the Strait – the only natural entry/exit point to the Mediterranean Sea – ranking amongst the three most geostrategic choke-points in the world for oil, commercial and military flows, joining the Mediterranean and Atlantic. The Strait route is highly significant in two-way commercial traffic flows between Ireland, the Mediterranean, Middle East and North African countries (MENA) and for access to the Suez Canal for transit to the Gulf and Asian markets.

The iconic Rock (426 m) has over 50 km. of road inside it, and is off-limits to the public, housing a British NATO base and traffic monitoring station. Spain is a NATO member but does not collaborate with UK NATO forces in Gibraltar in protest at the British presence there. The Rock is joined to the rest of Spain by a narrow neck of land with no natural water source nor agriculture land available. This proved problematic when the border was closed by Spain from 1969 to 1985, and Morocco across the Strait in North Africa had to become Gibraltar’s main source for water and fresh food importation.

The majority of Gibraltar’s population lives in a small area at the western foot of the Rock, and there is only one land crossing point into Spain. As the UK is not a signatory to the EU Schengen Agreement (1985), in which internal border checks on movement between EU states have largely disappeared, consequently Gibraltar remains outside the Schengen zone, while Spain is within it, and legally entitled to control passage at the Gibraltar border. Almost 100% of Gibraltar’s population want to retain sovereign links with the UK, and do not want Spain to have any sovereign rights over it. The Gibraltar Constitution (2006) does not in any way diminish British sovereignty there. The UK retains its full internal responsibility for Gibraltar, including external relations and defence, and relationship with the EU. However, Spain disputes British sovereignty, within the UN framework of decolonization (O’Reilly, 2015). Moreover, as clarified in the 2006 Gibraltar Constitution, Gibraltarians seek ‘decolonization’ of many existing UK political structures and a more modern ‘democratic’ relationship with the UK. But it does not want decolonization of the Territory that would retrocede sovereignty to Spain, nor give Spain any input into rule there. This strategy promotes Gibraltar’s cultural ethnicity, and possible nationhood if necessitated by changing regional and global geopolitics, or a change in UK Government policy that might give Spain any form of sovereignty there. However, the only article of the 1713 Treaty of Utrecht (Article X) that ceded Gibraltar to the ‘Crown of England’ that Britain hasn’t broken to date regarding Gibraltar, is that if and when it decides to relinquish sovereignty, then Spain must get first preference to take control.

Relationships between Gibraltar (population 34,500) and neighbouring Campo de Gibraltar (population 300,000) in Spain are symbiotic. Gibraltar employment and trade represents 25% of the Campo de Gibraltar GDP, according to the Gibraltar Chamber of Commerce. Unions on both sides of the border and chambers of commerce are agreed that fluidity at the border and continued cross-border trading are critical to the Campo and greater Andalucía region which has the highest unemployment in Spain; the neighbouring town of La Linea had 33.26% unemployment in 2018 (Expansion/Datosmacro.com; Stothard, 2018).

Economics: Gibraltar is largely self-sufficient, benefitting from extensive shipping trade, offshore banking, and international conference centre. Tax rates are low attracting foreign investment. The British military presence has been sharply reduced since the 1980s, and now contributes 7% to the local economy, compared with 60% in 1984. Major structural change from a public to a private sector economy has been implemented, but changes in government spending still have a major impact on the level of employment. Regarding financial sectors: tourism (11 million visitors annually), gaming revenues, shipping services fees, and duties on consumer goods, all generate revenue. The main GDP sources are the financial sector (30%), tourism (30%) and shipping (25%), while telecommunications, e-commerce, and e-gaming account for 15%.

Brexit negotiations

In 2017, Spain’s foreign minister stated that it wanted a bilateral deal with the UK including “managing the (Gibraltar) airport together” and greater co-operation on tax fraud and tobacco smuggling. In the usual Gibraltar/London and Spanish historical retort patterns, this was eventually followed up with Spain stating that: “Sovereignty is something we aspire to, that we are not renouncing, but in these negotiations, it is not the issue”. Brexit negotiations between the UK and EU have given new urgency to the Gibraltar dispute. In 2016, the Spanish government won a formal veto over the provisions of any future EU-UK deal that would apply to the Territory. Since Britain insists that Gibraltar must leave the bloc on the same terms as the UK, possible usage of such a veto could be problematic in any Brexit deal (Stothard, 2018).

In April 2018, the British Defense Secretary suggested that the UK is ready to use military force to defend Gibraltar’s sovereignty, vowing to go “all the way” to protect the territory. While a former Conservative leader Michael Howard stated that Prime Minister Theresa May would defend Gibraltar with the same resolve that PM Margaret Thatcher had when she sent British troops to war with Argentina in 1982 over the Falkland Islands (another British Overseas Territory, SW Atlantic). In that ten-week conflict, the British were ultimately victorious but leftover 900 dead (Asthana, 2017; Theresa May would go to war to protect Gibraltar, Michael Howard says). Howard’s statement was largely dismissed by PM May and rejected by most sections of the British political elite. Once again, this would suggest that the legacies and burdens of history have to be proactively challenged, as foreseen in Monet and Schuman’s vision for the European Project after WWII.

So what is the situation today for Gibraltar in the context of Brexit?

Sovereignty: In the UK there is cross-party consensus on the right to self-determination of the Gibraltarians and consequently their veto on any discussions regarding sovereignty. Gibraltar rejects Spain’s sovereignty claims and is supported by the UK government and opposition parties as being a matter for Gibraltar (UK Conservative Party Manifesto 2017: 36, Labour’s 2017 Election Statements; Liberal Democrat’s Manifesto 2017). Spain has sought to leverage sovereignty issues with the Clause 24 veto which would have Gibraltar’s future relationship with the EU subject to Spanish-UK bilateral agreements (i.e. a possible exclusive Spanish veto on the final Brexit deal).

The possibility of Gibraltar, being left out of the transition would mean Gibraltar being in limbo in 2019, sending the Gibraltar and Campo economies into a downward spiral, leaving Spanish workers in Gibraltar with controversial EU protection of their rights, and looming unemployment.

Gibraltar and Good Governance: Three major areas of concern to Spain – (i) taxation and the finance centre, (ii) tobacco, and (iii) Gibraltar airport.

Gibraltar argues that it is meeting all EU and international agreements and has been seeking a tax information exchange agreement (TIEA) with Spain for years. On transparency, Gibraltar has committed to the open public central register of ultimate beneficial ownership and the requirements of the 5th Anti-Money laundering directive. However, Spain remains cautious due to its historical experiences with the Gibraltar economy. Regarding the tobacco trade and loss of tax to Spain, the European Commission (2013/2014) looked into Spanish complaints about the volume of tobacco sales in Gibraltar. It identified the volume against the level of tourism and visitors/population and stated that Gibraltar complies with these quotas.

When Spanish authorities make complaints about loss of state revenue due to Gibraltar’s special tax and duty regimes on consumer goods including tobacco, alcohol and other products, ordinary Gibraltarians point out similar activities in Spanish Ceuta and Melilla in Morocco, and the Canary Islands – all three being an integral of the Spanish state under the Spanish Constitution and international law (O’Reilly, 1994).

Concerning Gibraltar Airport, Gibraltar will not accept Spain’s claim that the airport and isthmus upon which it is built are not British sovereign territory. Spain distinguishes these lands from the Gibraltar territory proper ceded in the 1713 Treaty, as land (and associated artificially created territorial seaward extensions) that was acquired by Britain through ‘acquisitive prescription’ i.e. creeping jurisdiction with attempted ‘de facto’ possession over the centuries. However, Gibraltar has tried to meet Spanish aspirations of having a Basle style access to the airport i.e. Basle airport gives legal access rights to Switzerland, France and Germany. So Gibraltar airport entrances/exits could cater for Gibraltar and Spain. This was planned as a result of the 2006 Gibraltar, UK, Spain tripartite Cordoba agreement. Gibraltar spent almost £80m to build a terminal which, if the Spanish complete an access portal on their side of the border, would allow easy flights with access straight into La Linea de la Concepcion, the bordering town. That agreement would allow joint commercial management of the facility and remains extant.

For the Gibraltar Government, Brexit discussions must respect Gibraltar’s sovereignty, jurisdiction and control, and reflect the 2006 Constitution which invests Gibraltar with powers on all matters except foreign affairs, defence and internal security. That means on certain subjects (as with devolved territories) that the UK cannot interfere, and it is Gibraltar that must engage in and decide on these. This is why Gibraltar engages in discussions with the British government and has warned that it cannot accept any threats woven into UK legislation or Brexit negotiations to impose legislation in a colonial manner. Like the Unionist DUP in Northern Ireland, the Gibraltar Government is closely monitoring ongoing Brexit discussions.

Visions for the European Project as laid down by the founding fathers of the EEC/EU, Monet, Schuman and others in the immediate aftermath of WWII, believed that integrating the economies of the European countries would be a first step in avoiding violent territorial nationalistic conflicts. This would lead to a prosperous democratic sustainable Europe. As with the major German and French powerhouses of the EU, interstate violence within the Union would be unthinkable. In other EU areas, as in Northern Ireland and EU Balkan states, major economic and political progress has been made. Nonetheless, many European citizens too often taking the achievements of the EU for granted must remain vigilant of the dangers posed by opportunistic politicians, and extremist populist right and left wing rhetoric offering one-dimensional answers.

Gerry O’Reilly is Associate Professor in Geography, and International Coordinator for the School of History and Geography at Dublin City University.

From 12-20 June 2019, Gerry O’Reilly was on research fieldwork in Andalusia, Gibraltar & Tangiers. While in Gibraltar his host was Dominique Searle MBE, Gibraltar Representative to the UK, Chief Minister’s Special Representative, HM Government of Gibraltar. Gerry also had discussions with Professor Catherine Bachleda, Vice Chancellor of the University of Gibraltar and Dr Jennifer Ballantine Perera, Director of the Institute for Gibraltar and Mediterranean Studies, University of Gibraltar. Gerry will be presenting his work at a conference on Boundaries organized in Gibraltar on 26th –28th September 2019.